‘Buyback and Build’; HOW?
What is your favorite demand and supply improvement strategy? Well, let me guess – token burns? Yes, ‘burn baby, burn!’. Top cryptocurrency exchange projects; Houbi and Binance burn hundreds of million dollars worth of tokens regularly. Many other cryptocurrency projects have adopted an exact strategy to improve the demand and supply metrics of their native tokens. While this has worked well for most of these projects, a number of them only realize at the end that a successful project is not just built by sending tokens to the furnace and screaming “burn…” lol.
Generally, a good utility will drive demand; regardless of the supply, value will increase exponentially and relative to the demand a use case is able to command. A number of projects with huge token supply have seen rapid growth over the years; Cardano (ADA), Ripple (XRP), chainlink (LINK) to mention a few. Fair enough, these mentioned projects have no record of token burns. Value keeps growing due to the utility they present. Token burns only hasten this growth as it actively reduces supply and enhance the effect of existing demand. Token burn announcements have also driven demand in some cases; however, these are rarely genuine and in most cases are just impulsive buys by expectant investors.
True demand only comes from utility marketed correctly. Token buyback and burns is just one of the numerous marketing strategies, a brilliant one to be frank. But why mint so much if you have plans of sending them to the furnace? Sounds unreasonable to release tons of tokens into circulation only to announce that you are buying them back and burning them. Well, it doesn’t matter what I think anyways, the buyback and burn strategy has worked a number of times.
Instead of destroying, why not build? Sounds, more reasonable. ‘Buyback and build’. But how will this work? The idea of ‘buyback and build’ is pioneered by ethereum layer-2 and ZK-rollup project – MUTE.
To ensure sustainable and continuous growth and development, Mute’s Buyback and build program is designed to improve the demand supply metrics of MUTE and VOICE tokens and also pilot project development. As part of the Buyback and Build program, MUTE will use 100% of the profits made from its products to buyback the MUTE and VOICE tokens from the market. However; in contrast to buyback and burn, these tokens will not be sent to the furnace, instead they will be used to further develop the Mute ecosystem.
Mute’s rebrand from NIX means a huge change to the initial tokenomics, including a new supply statistic which will be determined by the number of old NIX tokens successfully swapped to MUTE. This will tremendously affect the supply; positively. NIX’s POW algorithm also means the development team holds no significant percentage of the circulating supply. This further potentiates the effect of the Buyback program. Channeling the purchased tokens into project development will grow the financial aspect of the ecosystem tremendously.
Tokens bought back in this program are not available for immediate use, rather, they are locked in a smart treasury for a specified period of time after which are unlocked and used to fund development proposals.
Mute’s Buyback and build program is a continuous one. The project team will continue to inject transaction charges earned from Mute switch—the complete defi platform built on Ethereum’s layer-2 and powered by ZK-rollup; into continuous purchase of native tokens from the market. 70% of the generated fees will be used to buyback MUTE token from the market, the remaining 30% will be used to buyback VOICE token from the market. This ensures an ever-growing demand and also an ever-growing treasury.
Simply put, MUTE buys back its native token to build a strong and progressive treasury. The speed of growth of this treasury in turn depends on the amount generated from the transaction fees charged on the defi platform. With Mute leading the Layer-2 ecosystem, Mute switch is poised to generate enormous profits in fees.
Once again, Mute is introducing a new and better way to do things. Technological solutions, governance solutions and now financial solution, Mute keeps getting better. The buyback and build program is set to kick off at the launch of the Mute Switch application. Fees generated over a stated period will be spent totally on this program. More to come; we stay tuned!
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hello @joelagbo,
the project seems interesting we have to wait for it to consolidate more, in my opinion many projects only have marketing to give value to their projects but as we are in a rising market if a project is viable in time or just a scam does not seem to matter to new investors who are generating money only with speculations, now when the market changes the trend we will see which project is still standing.
The market is consolidating, probably a good time to take a look at projects with huge potentials, Mute is one of them, but always do your own research.
There is no doubt that building is better than destroying, that is why I say that cryptographic projects that take this philosophy into account are the ones that will have a good future.
Greetings and thanks for your contribution.
Thanks for taking time to read!
Hello @joelgbo
La.verdad no conozco esta plataforma o proyecto que mencionas, pro parece muy inteligente utilizar de lo que se genera en la plataforma para sostener los proyectos que la harán crecer. It is really interesting.
If I believe that this way you can maintain a healthy market, that the surplus you burn and give more value to the token would create more demand and therefore the price tends to rise.
Yes, token burns have done this for many projects, But in the end, it's only utility that drives real demand.
That's true. If the project is good the demand will increase without burning token. Burning is good but as well as making project great is the most important.
Exactly! thanks for taking time to read!
Buyback is the good strategy as it gives confidence in the buyers and this will give immense response for the project. I have seen many projects got successfully with this strategy.
Yes, it has worked for many, not sure i can say the same for a couple more others.
Greetings @joelagbo although I am not an expert in the area, can consider that it is a good strategy implemented by the different exchanges the same allows to generate greater value to the tokens. Thanks for your input
Thanks for taking time to read.